Cryptocurrency Markets Moved by Regulatory Actions, Federal Reserve Bank Paper Shows – Markets and Prices Bitcoin News


Cryptocurrency Markets Moved by Regulatory Actions, Federal Reserve Bank Paper Shows

The Federal Reserve Bank of Dallas has published a paper showing how cryptocurrency markets are affected by crypto regulatory actions. The research also determines whether the authorities have some scope to make cryptocurrency regulation effective.

Influencing Cryptocurrency Markets and Prices

Last week, the Federal Reserve Bank of Dallas published a working paper entitled “Cryptocurrency Market Reactions to Regulatory News.” The 18-page report is an updated version of a paper by the same authors previously published by the Bank of International Settlements (BIS). It is co-authored by Raphael Auer, principal economist at the BIS, and Stijn Claessens, the BIS’ Head of Financial Stability Policy and Deputy Head of the Monetary and Economic Department.

The paper explores the effects of regulatory actions on cryptocurrency markets. The researchers found that the markets respond “most strongly to news events regarding the legal status of cryptocurrencies.” News of general bans on crypto use, whether cryptos are securities, whether they will not be treated as a currency, or strict AML/CFT measures have strong adverse impacts. News indicating possible legal frameworks for cryptocurrencies or initial coin offerings (ICOs) “coincides with strong market gains.”

How regulatory actions affect the price of bitcoin.

Some regulatory announcements, however, do not affect cryptocurrency markets. According to the study:

Authorities’ unspecific general warnings have no effect, nor does news regarding the likelihood of central bank digital currency (CBDC) issuance.

Research Suggests Room for Effective Regulation

For their paper, Auer and Claessens identified 151 regulatory news events, most of which were in China, India, Japan, the U.K., and the U.S. They assessed the intraday impact of these events on the price of bitcoin as well as the prices of other cryptocurrencies and other aspects of the crypto markets.

“Overall, our analysis suggests that, at the current juncture, there is scope to apply regulations,” they believe. “It also indicates that regulation need not be bad news for the markets, with price responses notably signaling a clear preference for a defined legal status, albeit a light regulatory regime.” The researchers concluded:

At the current juncture, authorities around the globe do have some scope to make regulation effective.

Tags in this story
bitcoin prices, BTC Markets, BTC Prices, Crypto markets, Crypto Prices, cryptocurrency markets, cryptocurrency prices, Federal Reserve Bank, market

How do you think regulatory actions affect crypto markets? Let us know in the comments section below.

Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

Image Credits: Shutterstock, Pixabay, Wiki Commons, BIS, Federal Reserve Bank of Dallas

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Read disclaimer
Show comments